A report that Germany may be satisfied with a promise from Greece to enact just one of the reforms demanded by creditors and release the 7.2 billion euros in blocked bailout funds sent U.S. equities soaring from their open today.
Currency markets seemed to find the news item far less convincing, with the euro trading just a few points above its opening level for the day in the early afternoon.
In New York the Dow climbed over 60 point in the first minute of trading and by 1:30 pm had gained 238 points to 18,010.
Initially, the euro scored impressive gains, reaching 1.1386 in the London market after having closed on Monday at 1.1280. But most of that rise had evaporated by the London close as European governments declined to officially comment on the report.
Chancellor Angela Merkel's government will accept, wrote Bloomberg News, a 'clear commitment' to a single reform from a package that still includes higher taxes, lower pension benefits and state asset sales, quoting two unnamed German officials.
Greek Prime Minister Alexis Tsipras last Friday rejected the latest and supposed final proposals from the ECB, the IMF and the EU Commission, in a speech to the Greek Parliament.
Since then European leaders have been seeking a way out of the stalemate before Greece's now bundled 1.6 billion euros in IMF payments are due June 30th.
Merkel and French President Francois Hollande may meet with Prime Minister Tsipras today at the European Union summit in Brussels to try and reach an agreement.
The devotion of the continent’s leaders to keeping Greece within the euro has become ever more apparent as Prime Minister Tsipras has refused to surrender its campaign goal of ending the most punishing aspect of the fiscal austerity that the terms of the two European bailouts have imposed on the Mediterranean nation.
“Where there’s a will, there’s a way. The goal is to keep Greece in the euro area,” Merkel said to waiting reporters as she arrived in Brussels.
The European have repeatedly said that Greece must honor the terms of the agreement with its creditors in February which essentially reaffirmed the stipulation of the two earlier bailout deaces, in order to use the remaining 7.2 billion euros of financial aid. Without those funds Greek will likely default on it IMF payments this month.
"While Tsipras could be given until next year to carry out changes, such as trimming retirement benefits, he would have to initiate at least one major overhaul if he wants to get aid flowing. Neither person specified which demand Greece should fulfill. To convince creditors that Greece is serious, Tsipras would have to take tangible action, for instance introducing reform legislation in the Greek parliament, one person said. If Greek officials move quickly, funds could be released in early July, the person said," reported Bloomberg.
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